National City stock slides leave customers jittery

CLEVELAND — In the wake of the Bear Stearns Cos. investment firm's meltdown, National City Bank's shareholders and employees had a difficult week.

National City Bank shares traded on the New York Stock Exchange plunged 43 percent Monday amid speculation by the Wall Street Journal and a group of business journals that the bank was seeking a buyer. The stock price dipped to $6.56 Monday when it had been trading at nearly $40 a year ago but recovered to the $11 level by week's end.

National City Bank, with nine branch offices locally, is the second-largest bank in Muskegon County on the basis of deposits. The Cleveland-based regional bank's 22.2 percent market share in Muskegon County sits right behind market leader Fifth Third Bank. Local National City officials said they were unable to discuss the events of the past week.

The stock price slide prompted National City CEO Peter Raskind to send the bank's 32,000 employees an e-mail reassuring them of the soundness of the company.

Hometown newspaper the Cleveland Plain Dealer reported that Raskind also had a dial-up message for some employees, but bank spokeswoman Kristen Baird Adams declined to share the recording with the media while outlining its contents.

Raskind acknowledged that customers and employees may feel unsettled over the volatility of National City's stock, she said. The bank president reportedly said that customer deposits were safe and that the bank is "within the regulatory definitions of a well-capitalized institution," according to Adams. He also pointed out that the bank has ample cash to do business.

The financial news was better near the end of last week as National City Bank reported that it expected to gain $530 million from selling 39 percent of the shares it owns in Visa, as the credit card company raised money for its owners through a $17.9 billion initial public offering of stock this week.

But banking analysts view National City as one of the largest banks with great exposure to losses from high-risk mortgages, the Cleveland newspaper reported. On Jan. 2, National City cut its dividend 49 percent and said it was shutting down its wholesale mortgage division. Over the past months, the bank slashed about 3,400 jobs, the newspaper reports.

In the final three months of 2007, National City lost $333 million, or 53 cents a share, compared with a profit of $842 million in the last quarter of 2006. The bank is slated to provide its next quarterly report in April.

The speculation on the bank's future came from a Wall Street Journal article suggesting National City officials were seeking a buyer. The Journal reported that the bank was suffering from its history with subprime mortgages and problems it was having in the Florida real-estate market.

The San Francisco Business Times and the Business Journal of Phoenix both reported that one potential new owner on a short list of suitors was Wells Fargo & Co., the San Francisco bank.